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STATEMENTS OF ROGER PUTNAM, ADMINISTRATOR, ECONOMIC STABILIZATION AGENCY, ELLIS G. ARNALL, DIRECTOR, OFFICE OF PRICE STABILIZATION, AND NATHAN FEINSINGER, CHAIRMAN, WAGE STABILIZATION BOARD

Mr. PUTNAM. You are directing that to me primarily, I gather? Senator CAPEHART. Yes.

Mr. PUTNAM. Let me say this: The first part of your question was whether there was the proper coordination and cooperation. I think my two associates on either hand may have things to say on that subject as the hearings go on, but I want to say I think we are a very closely knit team-considering that we are all Presidential appointees, all confirmed by the Senate-and we work very well together.

I think that there are certain things inherent in a tripartite Wage Stabilization Board, in which I firmly believe, that make for some independence of thought, but I think there is good coordination and complete understanding between us. I will ask my colleagues to confirm that, or you may ask them as time goes on.

Now, as to your second question, there was continuing consultation between Mr. Feinsinger and me all during the time of the deliberation of the Board on the award for steel. That is not under me, you understand. In its dispute-settling function the Board is directly under the President and they do not have to come through me, but I think the fact that we were in constant touch shows the cooperation that we had.

Senator CAPEHART. You say they do not have to consult with you? Mr. PUTNAM. Not on the dispute-settling functions. They are working directly for the President on that.

Senator CAPEHART. They do not have to take into consideration whether in your opinion a price increase would be necessary?

Mr. PUTNAM. The dispute settling is completely a separate function of the Board. Their general regulations must be approved by me but the dispute settling activity is a completely separate function given to the Board by the President.

Senator CAPEHART. Did you at any time ever advise the Board or the chairman that in your opinion the wage increase that they were about ready to recommend was too high and that it would necessitate an increase in the price of steel and other things?

Mr. PUTNAM. We were constantly in communication with one another as to the possible effect on prices, and as to the possible effect on wages. I will say this, because I want to be completely frank with this committee: At the time the decision was made-and Mr. Feinsinger will bear me out-I felt that it was high. I have studied a lot more facts since then and I can bring some to you that have changed my mind. I did not have all the facts at that time.

Senator CAPEHART. Then at one time you did advise the Board that you thought their recommendation was too much?

Mr. PUTNAM. I discussed that with them just beforehand and I felt the figures they were discussing were high.

Senator CAPEHART. You have since changed your mind?

Mr. PUTNAM. I have since had more information and I can show you that at any time the committee wants to see it.

Senator CAPEHART. Is that your position, Mr. Arnall?

Mr. ARNALL. Well, number one, so far as I recall I never was consulted about what WSB was going to do. I am not the coordinating man. That is Mr. Putnam. I am kind of a dog's tail-after everything else has happened it gets over into my shop. I do not ever recall having discussed it except informally from time to time when there were meetings, and we told Mr. Putnam, Mr. Wilson, and Mr. Feinsinger my people did our policies and what we could and could not do. But I never did interfere with Mr. Feinsinger's job nor with Mr. Putnam's.

Senator CAPEHART. Did you at any time say to them that in your opinion the recommendations that they were about ready to make or had made were, in your opinion, too much?

Mr. ARNALL. I did not know anything about the recommendations until after they were made.

Senator CAPEHART. Then, as the price stabilizer, you were not consulted by the Board?

Mr. ARNALL. By WSB?
Senator CAPEHART. Yes.
Mr. ARNALL. No.

Senator CAPEHART. And you were not consulted with regard to what effect this increase might have on the economy?

Mr. ARNALL. They had been told what we could and could not do under our price policies. Informally I told Dr. Feinsinger that.

Mr. PUTNAM. May I just add to that that I was the coordinator there. My economist and your economist, Mr. Arnall, had gone over very carefully what the steel figures showed, and I am sure Dr. Feinsinger has seen those figures as well.

The CHAIRMAN. You told me that you could not coordinate because you did not have the final say.

Mr. PUTNAM. I said I could not order what this Board should recommend, and I do not think anybody should. I think a tripartite board is the best way to settle labor disputes.

I could not order them, but on the other hand, I think there was complete coordination and an understanding of what the effects would be.

Senator CAPEHART. Then the fact is that we really have two separate and distinct boards with one having absolutely no authority over the other; one having the authority to recommend any kind and type and amount of wage increase that they might care to under formulas that have been previously established, subject, of course, to change. We have two independent organizations, one dealing with prices and another dealing with wages?

Mr. PUTNAM. No, they are not independent because they both coordinate through me.

The dispute settling recommendations of this Board must be within its own rules and the rules have had to be approved by my office.

There is an interchange of information, sometimes direct, but also through me constantly, and I will say we have had a habit of dining together relatively often to make sure that we do coordinate our activities.

Senator FULBRIGHT. Mr. Putnam, is there anything to this limitation or not? If you are going to follow a procedure, I think it should

be followed. I think the Senator's questions are appropriate, of

course.

You seem to have the feeling that the dispute settling is a function apart and unrelated to stabilization of wages and prices.

Mr. PUTNAM. Oh, no, sir. I did not mean to say that if I did. Senator FULBRIGHT. I believe you said you had no jurisdiction. over dispute settling. Is that correct?

Mr. PUTNAM. I have no jurisdiction over it, but on the other hand, the Executive order under which they operate as a disputes board says that the recommendations they make must be consistent with stabilization policy. They formulate the stabilization policies and I must approve them as far as wages are concerned.

Senator FULBRIGHT. I understand you did not agree with them in the beginning. You have since become a convert, but in the. beginning you did not agree?

Mr. PUTNAM. In the beginning I said that I felt it was high, but that was before I had completely seen all the facts of the thing. I prepared some myself-not facts they have given me, but things I have dug up myself since then.

Senator FULBRIGHT. You know the Congress and this committee went to great trouble to try to keep wages and prices tied together. When one went up, the other should also. That was the philosophy of the original bill.

There had been criticism, governor, that in the last war they tried to hold prices down and keep wages up, particularly near the end of the war. You recall that, do you not? Do you not recall the effort made to take them together? They had difficulty, I agree, but I think that was the spirit of the law, that we should not attempt to hold prices down and let wages go up because it would not work. Would you not consider that the spirit of the law?

Mr. ARNALL. Assuming wages and prices are in proper relationship. when you start, what you say is true. But, you see, the fallacy in what you say is that it is based on the assumption that they are in a proper, stabilized relationship, whereas actually either prices may be too low, in which event we raise them under our standards with no reference to wages; or, suppose wages are too low, they raise them under their standards with no reference to prices. It is not axiomatic that every time you have a price increase you have a wage increase, nor is it axiomatic that every time you have a wage increase you have a price increase.

Senator FULBRIGHT. There is no rule of thumb, I agree with that, There is no automatic way for this to go into effect, but I mean the two should be considered.

Mr. ARNALL. There should be some proper relationship, of course. Senator FULBRIGHT. To give one group authority to recommend wages without regard to prices would violate that clause.

Mr. PUTNAM. I do not think so, sir. That is where I come inte the middle of it, to coordinate the two because they are separate. The recommendations for settling disputes must be within wage stabilization policies and the wage stabilization policies are set up by this tripartite board subject to my approval. Prices are governed by Governor Arnall and my job is to coordinate the two and see that they are kept reasonably in balance. And I think we have done pretty well on that. I think the record will show it.

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Senator FULBRIGHT. I have one other question. I would like Mr. Feinsinger to tell us what was the main consideration for recommending the amount of the wage increase?

What I have in mind is, was it because they were paid too little under general conditions, or because of their relation to some other group of wage earners? What was the controlling factor in the recommendation you did make?

Mr. FEINSINGER. We made two types of money adjustments. You are not interested in the nonmoney adjustments, I take it, but just the money adjustments?

Senator FULBRIGHT. Do you mean fringe benefits?

Mr. FEINSINGER. The money adjustments are two in kind; adjustments in rate of pay and adjustments in what we call fringe benefits, such as vacation, holidays, and the like.

Senator FULBRIGHT. Those two, as distinguished from the union shop; is that what you mean?

Mr. FEINSINGER. Seniority, and things of that sort, Senator.

Now, Congress told us to stabilize all forms of compensation and that includes fringes as well as rates of pay. That was quite right, because either can add to business costs and add to purchasing power. Therefore, we have regulations which have been duly approved by the Administrator which apply to increases in rates of pay, and so-called fringe adjustments.

Let me take the fringe adjustments first, because they are easier. Incidentally, the companies themselves have made no objection to the Board's recommendations on the fringe adjustments except one of them, time and a quarter for Sunday pay as such.

We have a regulation dealing with fringe adjustments which has been duly approved by the Administrator which provides that if an employer wants to make adjustments in his vacations, holidays, and so forth, or agrees with the Union to do it, that will bring his practice up to the prevailing practice in the industry or area, he may do so upon petition. Where you are dealing with a national industry like steel, everybody on our Board, including our industry members, agree that the proper comparison is with other major American industries. Had we considered fringes on an area basis, as also provided under our regulation, there are very few American communities, particularly those in which steel mills are located, which do not already have such fringe benefits.

There is not a single adjustment that we have recommended which puts the steelworkers ahead of workers in other industries. In most respects, it leaves them still behind. I will illustrate.

On vacations, they have 1 week after 1 year of service; 2 after 5, and 3 after 25. The steel workers asked for many important changes in the vacation period. We recommended only one change.

We reduced the requirement for 3 weeks vacation from 25 years to 15 years, which is certainly well within the practice in American industry, gentlemen.

I can be specific if you like, but I do not think that statement needs corroboration.

Secondly, with respect to holidays, the industry had six holidays named in their contract, but they did not pay anything when the men did not work on a holiday. When they did work on the holidays, they paid time and one-half.

The union asked for eight paid holidays, straight time when not worked, two and a half times when worked. We rejected the demand for an increase in the number of the holidays. We recommended straight time for six paid holidays when not worked, and increased the time-and-a-half premium for holidays when worked, to double time. That is well within the established practice in major American industries.

On shift differentials, in 1944, the War Labor Board of which I was subsequently a member, recommended 4 cents for the second shift and 6 cents for the third shift. Had they put in a percentage differential, there would not have been any problem.

We put in a cents-per-hour recommendation. We recommended, at this time, 6 cents for the second shift, 9 cents for the third shift; a conservative adjustment well within the practice in major American industries.

On the North-South differentials, over the years, United States Steel and Republic Steel have narrowed the 17.5 cents differential down to 10 cents. We merely recommended a further narrowing to 5 cents.

That only affects, I think, those two companies, maybe one or two more; and the cost even as to them is about three-tenths of a cent. There is no objection to that.

The only other fringe adjustment we recommended was time and a quarter to men who have to work on their Sabbath, and that, not to be effective until January 1, 1953, so that the companies have 9 months to reschedule their operations to reduce their cost.

The union asked for time and a half for Saturday as such and double time for Sunday as such. That is standard practice in many American industries.

In continuous operations, it is not so prevalent. The argument of the industry is, if the industry has to work around the clock and 7 days a week, men should not get extra pay for working on Sunday. The answer to that is, if that is the necessity of the industry, the public should pay that cost. If we ask an industry to operate around the clock, if it has to work around the clock, the company should be able to pass off that cost into its profits, but the man should not pay that.

No man should be compelled to work on his Sabbath at the same rate of pay he works during the first five days of the week.

We recommended what? Time and a quarter. Aluminum pays time and a half. Glass, some of the major food-processing industries, have a premium.

That is the whole kettle of fish on our recommendations on the fringes. We did not make them retroactive. The total cost for the year 1952, on an annual basis, would have been 5.1 cents; the cost distributed over a 9 months' period is 4.25 cents. The cost of Sunday pay effective January 1, 1953, is, by the company's figures, 3.6 cents excluding, on the one hand, added payroll costs and added pension reserve costs, and excluding, on the other hand, possible reductions in the cost by rescheduling of operations.

There is the picture on the fringes. We were definitely within our established regulations-had the company and the union come in jointly on an agreement, we could and would and should have

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